Blackstone has refinanced Chiswick Park with a fresh £400m senior loan provided by Deutsche Bank, which is set to be securitised by early June, and a £200m mezzanine facility provided by Apollo Global Management, on behalf of a separate managed account.
The combined £600m refinancing – which will repay the outstanding £293.54m DECO 2011-CSPK Limited CMBS in full at the 22 May interest payment date (IPD) as well as GIC Real Estate’s £61m junior loan – effectively acts as a “cash-out” refinancing for Blackstone, which shelved plans to sell off the 1.3m sq ft West London office park in January.
Lloyds Banking Group’s £53m development loan for Chiswick Park’s Building 6 – one of the two estates development plots which together with Building 7 cost Blackstone £5m as part of the full £480m price – was also repaid as part of this refinancing. Building 6 is Aker’s new headquarters.
Chiswick Park has been re-valued at £780m, which puts the senior LTV at 51.3% and the whole loan LTV at 76.9%.
On Friday afternoon, Situs Asset Management issued a special notice to confirm that Blackstone had prepaid the outstanding £293.54m DECO 2011-CSPK CMBS in full.
Blackstone brought Chiswick Park to market last autumn with a £800m price tag, but was unable to secure sufficient interest from the target sell-on investors – sovereign wealth funds – which is thought to be due, at least in part, to the unfinished speculative development for the office campus estate’s ‘Building 7’.
As a result, the world’s largest private equity fund switched track and opted to refinance Chiswick Park, this time inclusive of the ‘Building 6’ which was omitted from the collateral pool in the original DECO 2011-CSPK Limited CMBS, which only priced in June 2011.
Refinancing the west London office complex at £600m enables Blackstone to crystallise around £75m of profit now.
This is based on an all-in price paid today of circa £525m – which comprises the £480m paid for Chiswick Park in March 2011, plus development costs for Building 6 – relative the to £600m refinaincg level.
Blackstone’s £600m refinancing reflects a return of around 120% of invested capital, and based on a £780m appraisal, implies around £255m in value improvement across Chiswick Park.
Blackstone’s target now is to complete the speculative development of ‘Building 7’, including all leasing, and seek to sell a completed Chiswick Park in less than two years’ time.
The new CMBS will include Aker’s new headquarters at Building 6, but exclude Building 7.
Under the terms of the existing Chiswick Park CMBS, Blackstone was required to make an early prepayment fee of 0.5% of the outstanding £293.54m balance – equating to £1.47m – due to Deutsche Bank.
It is probable that a deal between borrower and bank has been negotiated over either this fee due or the arrangement fee for the new £400m senior, so as to avoid double-fees.
Ken Caplan, head of real Estate for Blackstone in Europe, said: “We are delighted to be working with Deutsche Bank and Apollo on the refinancing of Chiswick Park.
“Chiswick Park is an outstanding property that continues to get better and better with strong demand for space from existing and new tenants who are attracted by the high quality physical environment, the Enjoy Work on-site program and affordable occupancy costs. Work on the 12-storey Building 7 has now commenced and this refinancing underscores the overall excellence of Chiswick Park.
Gad Caspy, head of commercial real estate Europe, said: “Deutsche Bank is pleased to finance this high quality asset for the second time and is delighted to support Blackstone in their management of Chiswick Park.
“This financing is a good example of Deutsche Bank’s capability and strategy in Europe, demonstrating our strength in providing senior financings across many jurisdictions, asset classes and risk profiles.”
Eastdil Secured acted as financial advisor to Blackstone on this transaction.
“London continues to be one of the most liquid global real estate markets, and a safe haven,” said Michael Van Konynenburg, global head of debt capital markets at Eastdil.
“Chiswick Park is a prime example of the trend where international debt capital is attracted to the strong sponsorship, excellent tenancy, and high quality product in this market.”